The Tariff Suggestion
by Tracy Schruder
Understanding Tariffs: What They Are and How They Impact the Economy
I never really paid any attention to tariffs in the past. To be honest, I didn’t even know what tariffs were. As I’m a red blooded homegrown Canadian, I watch the news just like everyone else and I’ve noticed that most of the news revolves around politics ever since the Covid lock downs, anyway. So, like every other red blooded Canadian, I’ve taken notice to all of the reports on (presidential candidate) inaugurated President Trump.
It’s my opinion that no government can make their country great again by alienating the rest of the continent but that’s just one Canadian’s opinion. I had to figure it all out so I could prepare myself and my family for everything that this entails. So, I’ve done my research and I now, have come to understand that a tariff is a tax imposed by a government on imported goods or services. It is a trade policy tool used to regulate international trade and protect domestic industries.
Tariffs can be levied on a wide range of products, including agricultural goods, manufactured goods, and services.I also learned there are several types of tariffs, including:
Ad valorem tariff
A percentage-based tariff that is calculated as a percentage of the imported good’s value.
Specific tariff
A fixed amount of money levied on each unit of the imported good.
Compound tariff
A combination of ad valorem and specific tariffs.
Tariff rate quota (TRQ)
A tariff that applies a lower tariff rate to a certain quantity of imports, and a higher tariff rate to imports above that quantity.
I also learned what the purpose of Tariffs are:
Protecting domestic industries
Tariffs can be used to protect domestic industries from foreign competition by making imported goods more expensive.
Generating revenue
Tariffs can be used to generate revenue for the government.
Influencing trade policy
Tariffs can be used to influence trade policy and negotiate trade agreements.
I learned about the (potential) positive effects of Tariffs
Protection of Domestic Industries
Tariffs can protect domestic industries from foreign competition, allowing them to grow and develop.
Job Creation
By protecting domestic industries, tariffs can help create jobs and stimulate economic growth.
Revenue Generation
Tariffs can generate revenue for the government, which can be used to fund public programs and services.
Negotiating Leverage
Tariffs can be used as a bargaining chip in trade negotiations, allowing countries to secure better trade deals.
Encouraging Domestic Production
Tariffs can encourage domestic production by making imported goods more expensive, which can lead to increased domestic investment and innovation.
Reducing Trade Deficits
Tariffs can help reduce trade deficits by reducing the amount of imported goods and increasing the amount of exported goods.
Protecting National Security
Tariffs can be used to protect national security by limiting the importation of goods that could pose a security risk.
Environmental Protection
Tariffs can be used to protect the environment by limiting the importation of goods that do not meet environmental standards.
Promoting Fair Trade
Tariffs can be used to promote fair trade by penalizing countries that engage in unfair trade practices.
Stimulating Economic Growth
Tariffs can stimulate economic growth by increasing domestic investment, innovation, and production.
It’s worth mentioning that while tariffs can have these positive effects, they can also have negative effects. Listed below are some of the negative effects of Tariffs:
Increasing prices
Tariffs can increase the prices of imported goods, which can hurt consumers.
Reducing trade
Tariffs can reduce trade between countries, which can hurt businesses that rely on imports and exports.
Creating trade wars
Tariffs can create trade wars between countries, which can hurt the global economy.
Overall, I’ve come to learn that tariffs are a complex trade policy tool that can have both positive and negative effects on the economy.
I can only imagine how much everything is going to change if the tariffs suggested by President Trump become a reality. Let’s just say that I’m hoping and praying that the Canadian government has what it takes to reach a fair and just, agreement and stop this nonsense about ‘threatening the neighbours with unreasonable and unnecessary tariff price hikes.
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